In Big Law Tax Scramble, Sometimes It Takes a Village
How confusion over the tax bill unfolded for a clutch of Big Law partners in Bellport, Long Island.
January 04, 2018 at 12:11 PM
4 minute read
Village of Bellport, New York.
In the final days of 2017, law firms and their partners peppered Citi Private Bank's Law Firm Group with queries about establishing lines of credit so they could prepay their 2018 property taxes, according to Michael McKenney, head of credit origination for the Citi unit.
The lawyers were in a hurry to get those property taxes prepaid before Jan. 1, when a $10,000 cap became effective on related federal income tax deductions; that cap is part of the new tax bill President Donald Trump signed into law before Christmas.
But in an advisory notice posted Dec. 27, the Internal Revenue Service complicated matters by warning that the property tax prepayments, which lawyers in high property tax regions, such as New York and New Jersey, were busily crafting, might only qualify as deductions in certain situations. “Prepayment of anticipated real property taxes that have not been assessed prior to 2018 would not be deductible in 2017,” the IRS explained.
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